Tuesday, June 25, 2019

Carl: Hello everyone, please welcome Gary to the group. He could use our support.

Group: Hi Gary!

Gary: Like all of you, I buy too many board games. They’re sitting in shrink wrap on shelves.

Group: Nodding approval.

Gary: But I’m mostly trying to sell them to you folks, as a retailer.

Group: Disapproving grumbling.

Gary: But often at a discount, because they sell like crap.

Group: Murmuring with approval.

Gary: You see, as someone whose mostly a role player, I tend to buy board games that interest me. Really complex stuff that makes my brain tingle. But I don’t play them. As my friend Jay says, a good day board gaming is still not as good as a bad day role playing. You know, like the sex and pizza metaphor.

Group: Angry grumbling. Several female hands go up.

Vijay: They can’t all sell badly, what about Terraforming Mars with its eight point four on bee gee gee?

Gary: Yes, Vijay, even Terraforming Mars with its eight point four. Where did you buy your copy Vijay?

Vijay? (Sheepish) Amazon.

Gary: Yes, Amazon. You don’t need me and I shouldn’t be catering to you.

Carl: I bought my Terraforming Mars at your store!

Gary: Oh, when was that Carl?

Carl: At your Black Friday Sale.

Gary: Right, on clearance. *cough* vulture *cough*

Carl: What was that?

Gary: Anyway, this is my first day vowing to order games only for our casual customers, the ones who actually buy from us. People who allow us to sell them games through our demos and our enthusiasm.

Carl: So no more high concept bee gee gee picks?

Gary: No Carl, no more complex board games. Which even at their best, aren’t as good as a bad night of D&D. Or you know, sex and pizza.

Friday, June 14, 2019

If I had to give a presentation to a class about my job, my profession, my possibly foolish choice of becoming a small business owner, my main concern is this: I really don't want to sound like an asshole. I say this because I didn't use to be a small business owner, so I know how I sound when I talk about state mandated wage inflation, reckless politicians in Sacramento, and our incoming tariffs from our learning disabled president. I've got enough opinions about politics and policy to really sound like an asshole, to everyone! It crosses political boundaries. I'm that good.

Maybe I am an asshole. It's always a consideration. Maybe I should consider the advice of Raylan Givens: If you meet an asshole in the morning, you've met an asshole. But if you meet assholes all day, you're the asshole.

Once upon a time, I, Chuang Chou, dreamt I was an asshole, pontificating hither and thither, to all intents and purposes an asshole. I was conscious only of my irritation as an asshole, unaware that I was Chou. Soon I awaked, and there I was, veritably myself again. Now I do not know whether I was then a man dreaming I was an asshole, or whether I am now an asshole, dreaming I am a man.
The distant memory of the man I once was, before I became an asshole, sometimes haunts me. Spending Other Peoples Money (amusingly referred to as OPM), flitting from job to job, voting based on lofty principles with no consideration of financial responsibility. Oh to be a man again.
To really be an asshole is to be seen as being somewhat greedy of spirit. This is a problem for small business owners. I regularly spend half a million dollars a year on games, and another half a million on labor, utilities, rent and other garbage. I am a rich man by individual standards, while a poor man by business standards. Surely I can be squeezed for a few more dollars, why so much complaining? When I think of putting The Man up against The Wall, I envision a legion of like minded people behind me. What I don't realize, is I am The Man. I will be put against The Wall. Chuang Chou never dreamt of that!

So class, to understand my plight, to understand whether I'm a man or an asshole, I think perhaps you need to grasp the duality of the situation, that both states are potentially true. That my survival depends on stability, that society is increasingly in a state of flux, and that my ability to flit around like a butterfly, hither and thither, is increasingly dependent on the whims of an indifferent populace and their feckless leaders. Also, STEM fields. Business is a good safety.

Monday, June 10, 2019

Chess was important growing up. When I finally got my own room as a kid, it was the former den, filled with my father's chess trophies and books from his time on the Penn State chess team. I wasn't terribly into chess, but I read all the books in the den, mostly sports novels (ugh), chess strategy and how-to books. For a while in high school, I brought my chess set and played in science class, where the game was socially acceptable. My player's handbook stayed at home. I was a solid, thinking several moves ahead kinda kid, so the chess books were mostly aspirational. I felt like I wasn't quite smart enough to go full chess, like a wannabe wizard with an eight intelligence. Magic missile was just out of my grasp.

When I opened the store in 2004, I had a very respectable collection of chess sets, amazing really, for a 940 square foot store (amazing equals dumb for non retailers). These were all on full display, and about once a week, I would remove the pieces of each set, dust the board, and put them back on. My father was impressed when he visited. When it came to chess, I knew how to represent. This was all incredibly time consuming and eventually I lost several boxes, making selling them pretty difficult. Oh, and then there were the missing pieces. Realizing the queen is missing from a $250 Egyptian chess set will make you seek out boxed chess sets pretty fast.

As the display sets sold, their replacements tended not to get re-opened, and eventually not re-ordered as the plain white box did nothing to help move them. Chess sets sold poorly. They have always sold poorly. They sell poorly now. Stores in the region who do much better with chess, who dominate with chess? They sell poorly there too. It's a legacy item, an item that says "games" to the general public. It's a touchstone for me and my father. But chess, to be honest, is a complete waste of space.

That's not true everywhere. There are stores in the Midwest that do gangbusters with chess. But here? The serious players buy their sets online, often through chess organizations or just Amazon. In the store, I think it's enough to have a tournament size Staunton set and a roll up travel set, but beyond that there are hundreds of themed chess sets that will make you crazy as customer seek them out. Civil War? Simpsons? Harry Potter? You could stock an entire store with what's out there ... and promptly go out of business.

I used to special order sets and it was time consuming and unrewarding, unlike the work with other types of games. Help a board game customer and you may have created a regular board game customer and maybe even a board game hobbyist. Help someone with a chess set and you've sold them a chess set and you'll never seem them again.

I've watched my classic games numbers stagnate, even when I double or triple my selection. I've tried more and less and different and boxes with pictures and on display and nope, none of it works. It's dead here. I've been foolish not to drop it sooner. I would look at the corner where our "classic" games reside and fantasize about what I would put there. Frisbee golf. A coffee kiosk. Anything but chess.

With 25% Chinese tariffs, I'm extremely concerned about board games. But then there's chess. All those classic games come from China, really. I had forgotten. It's not even on my radar anymore. We just didn't re-order classic games after the holidays and nobody seemed to mind, except the occasional random customer who has clearly never been here before. We send them to the regional store that has a better selection and also doesn't make money selling them. Then that classic game space got taken up with profitable stuff. So with tariffs on the way, a better use of that space, and performance numbers that I use an example at trade shows of what you should drop, I think it's time to say goodbye to chess. Sorry dad.

Saturday, June 1, 2019

With 25% Chinese tariffs taking effect this month, I'm already seeing solicitations for board games with significantly higher prices. The $60+ board game is likely to be the norm, up from an average of $45-50. I wrote on my Facebook author page I thought my board game sales were likely to drop by 40%. That's a really high number and it's complete speculation, but let's take a look at what we know.

We know very little. If we try to read the tea leaves of market forecasts, they're concerned with publicly traded companies, most of whom can absorb some or all of a 25% tariff. Best Buy sources enough Chinese products with high margins, they may not even raise prices, just take the hit. For us small retailers, sellers of speciality goods without enough margin to absorb tariffs and no cushion to absorb higher costs, they just predict doom and gloom. A 25% tariff is a necessary 25% price increase.

One example of how price increases directly affect sales from comes from the auto industry. When vehicles rise in price, for every dollar of price increase, demand drops by .87%. With a 25% increase in price, we should expect a 22% decrease in sales using the auto industry numbers. That's our baseline though, a starting point. Buying a vehicle is different than a board game.

If you don't like Chevy dealer A, Chevy dealer B isn't going to have a significantly different price. That's because vehicles are sold through a closed dealer network and gross margin on board games is about 45% compared to 8-10% on vehicles. There's no wiggle room to sell you a Chevy Colorado for 25% off, even if dealer B wanted to. And there's no online clearinghouse for a third party to devalue a new Colorado. If you don't want to spend $60 for a board game at my store, there will always be someone selling that game for 20-30% off online, even in the age of MAP price protection. There is someone selling that same game with an MSRP of $45, right now for $30-35, which is probably half the regional sales of that game. It's more complicated than that though.

As the price of an item increases over psychological thresholds, the pressure to buy it online increases dramatically. Most store owners will tell you once a game hits a certain price plateau, sales drop off considerably as customers seek better value. It's why many of us sell so many little card games and so few $100 board games. The impulse purchase, in which calculations don't play much of a role, is probably around $30-40 nowadays. At $40-50, there's some thinking and we lose a lot of sales to discounters, and at over $50, there's a lot of thought into how to acquire that item most efficiently. We are certainly earning that business in some fashion. And that's where board games will go, breaking that price ceiling (the one I artificially created for this example).

If you think this will be business as usual, we're going from a strong economy to where, "Markets are pricing in rate cuts in September and December." Markets are already signaling they expect pain in the second half of the year with interest rate increases up a quarter percent. My store sales for 2019 are up a staggering 20%, due to a number of factors. I'm predicting I end the year up 4% due to tariffs. It's a complicated bit of bistro math, but I'm expecting a lot of pain. I know I'll be doing a lot of dancing, I just don't know the tune.